Image Courtesy of Patrícia Almeida on Flickr

Covid-19 measures: 4 May 2020 update

Following the range of updates over the last several weeks, we have now rounded up the latest information from the government on specific schemes where additional detail was released. This update covers measures discussed on 4 May.

Bounce Back Loan Scheme (BBLS)

The scheme opened for business at 9.00 am on 4 May. Since last week’s initial announcement further details have emerged:

Terms

  • The loan can be between £2,000 and £50,000, subject to a maximum of 25% of turnover.
  • The government provides a 100% guarantee to the lender: the always borrower remains fully liable for the debt.
  • No security is required.
  • The first year’s interest will be covered by a government Business Interruption Payment. During that period, the borrower does not have to make any repayments.
  • The interest rate thereafter is set at 2.5%.
  • There are no fees for the borrower.
  • The maximum term of the loan is six years, but repayment is allowed at any time. No early repayment fees will apply.

 

Criteria

  • The application form contains only seven questions which require basic information, e.g. turnover, company number etc.
  • While the British Business Bank will run the scheme, it recommends businesses should directly approach lenders. At present only ten banks are participating (nine of which are High Street names). Only one, HSBC, is offering loans to non customers, subject to know-your-customer and other checks.
  • The borrower must be based in the UK, have been negatively affected by coronavirus and be able to confirm that on 31 December 2019 it was not a “business in difficulty”.
  • If the business cannot pass that end-2019 financial test, then it must certify that the loan does not breach de minimis State aid restrictions and will not be used to support export-related activities.
  • Applicants cannot have received a loan under the existing Coronavirus Business Interruption Loan Scheme (CBILS). However, a CBILS loan of up to £50,000 can be transferred to the BBLS up until 4 November 2020.

The first day of the BBLS saw over 110,000 businesses apply for loans totalling an estimated £3.3bn (an average loan of about £30,000).

Coronavirus Business Interruption Loan Scheme (CBILS)

With the advent of the BBLS, the minimum new loan under the CBILS has been increased to £50,000.

The number of British Business Bank accredited lenders under the schemes now over 50.

As at 29 April, £4.1bn had been lent to 25,262 borrowers (an average loan of about £165,000)

Coronavirus Job Retention Scheme (CJRS)

The Department for Work and Pensions has confirmed that pay for furloughed workers taking family-related leave (e.g. Maternity Pay and Paternity Pay) is to be based on normal earnings rather than furloughed pay.

The Pensions Regulator has issued updated guidance for employers on automatic enrolment of pension and the CJRS.

As at 3 May CJRS applications from 800,000 employers had been received and 6.3 million employees – about 20% of UK employees – were covered by the scheme, according to HMRC. The total value claimed is £8bn.

Given the 45-day consultation period for redundancy, any announcements on the extension of the CJRS beyond 30 June are likely within the next week.

Self-employed Income Support Scheme (SEISS)

Revised guidance now has more information on eligibility and is supported by a new online eligibility tool.

The launch date of the scheme has been confirmed as Wednesday 13 May. Approved claims will be paid “within 6 working days”.

Despite considerable lobbying there have been no moves from the Treasury to assist directors of small companies who rely on dividends to provide their remuneration.

Grant Funding Schemes

On 2 May, the government announced a £617m extension to the Small Business Grants Fund (SBGF) and Retail, Hospitality and Leisure Grants Fund (RHLGF) schemes. This is primarily aimed at businesses operating in shared spaces (e.g. co-working offices), regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates. The allocation of funding will be at the discretion of local authorities.

Businesses must have under 50 employees and be able to demonstrate that they have seen a significant drop of income due to Coronavirus restriction measures.

There will be three levels of grant payments:

  • The maximum will be £25,000.
  • There will also be grants of £10,000.
  • Local authorities will have discretion to make payments of any amount under £10,000.

Further guidance for local authorities will be set out shortly.

Tax credits

The government has confirmed that those unable to work their normal hours or furloughed because of Covid-19 will continue to receive their usual tax credit payments, provided they remain employed or self-employed. Covid-19-related changes to income and/or hours do not need to be reported, but any other changes must to be notified to HMRC in the normal way.

Business Interruption Insurance

Following its ‘Dear CEO’ letter on 15 April, the Financial Conduct Authority (FCA) has announced that it “intends to obtain a court declaration to resolve contractual uncertainty in business interruption (BI) insurance cover”. The FCA says that “any uncertainty needs to be resolved as quickly as possible” and it hopes to place the issue before the courts “in an agreed and urgent manner”.

Any judgement will not determine how much is payable under individual policies but will provide the basis for doing so and offer guidance for the Financial Ombudsman.

Lifetime ISAs (LISAs)

The Treasury has temporarily reduced the withdrawal charge on LISAs from 25% to 20%, removing what had been an effective 6.25% penalty once the government bonus was taken into account. The reduction applies from 6 March 2020 to 5 April 2021, meaning some (dis) investors in March and April will be due a refund.

Summary of government business support

Firm Size Turnover < £45m Turnover > £45m Investment grade
Bounce Back Loans (BBLS – up to £50,000) X X X
Coronavirus Business Interruption Loan Scheme (CBILS – £50,000 – £5,000,000) X
Coronavirus Large Business Interruption Loan Scheme (CLBILS) X X
Covid Corporate Financing Facility (CCFF) X
Job Retention Scheme X X X
Business Grants (dependent on rateable value of the property) X X X
VAT deferrals X X X
Covering the cost of statutory sick pay X X X
Future Fund (only if VC funded) X X

Source: HM Treasury/GOV.uk, 4 May 2020 press release

 

Image Courtesy of Flickr_Ishan Manjrekar

Updated Covid-19 measures: to 27 April 2020

Changes since last bulletin on 20 April 2020

  • Bounce back loan scheme launched with 100% government guarantee.
  • Possible shape of Coronavirus Job Retention Scheme after the end of June.
  • Abandonment of requirement for forward-looking financial information or business plans when applying for business interruption loans.
  • Temporary ban on use of statutory payment orders and winding up orders for non-payment of commercial rents.
  • Government’s business support finder tool introduced.
  • FCA confirms three-month payment freeze for motor finance, buy-now pay-later, rent-to-own) and pawnbroking agreements.
  • One month interest-free payment freeze for high cost short term credit ordered by FCA.
  • Promise from Chancellor of more detail on Self-employed Income Support Scheme in week commencing 27 April.

 

Background

The 11 March Budget from the Chancellor, Rishi Sunak, included £7 billion of expenditure targeting the impact of Covid-19 on employees, the self-employed and businesses. On 17 March a further raft of measures was announced, amounting to an additional £20 billion of support expenditure plus £330 billion of loan guarantees.

Between 20 March and 26 March, the Chancellor made three separate rounds of announcements, including measures to support retention of employees, a range of financing options and an income replacement scheme for the self-employed. In many instances, the devolved governments have followed suit, with funds provided from Westminster under the Barnett formula.

 

Guidance on measures have regularly been issued as queries have been raised and clarifications sought. As a result, what was originally announced could well differ from what now applies, for example, in the cut-off date for the job retention scheme.

We have pulled together a round-up of the various announcements so far for businesses and individuals including useful links to government sites and added new details where released, including announcements through to 27 April.

Measures for business

Coronavirus Job Retention Scheme (CJRS)

Some form of job support scheme had been expected after the 17 March announcement and the CJRS is similar to schemes that have already been set up elsewhere in Europe. Under the CJRS, “HMRC will reimburse 80% of a furloughed worker’s wage costs, up to a cap of £2,500 per month’, provided the worker was on the employer’s PAYE payroll on or before 19 March 2020 and was notified to HMRC on an RTI submission by that date (something which generally rules out March 2020 recruits unless they are paid weekly). The cut-off date was originally announced as 28 February but was subsequently changed to 19 March (the day before the Chancellor announced the CJRS).

The time frame for payments covered by the CJRS was extended to the end of June on 17 April. The scheme opened for applications on 20 April and a week later over 500,000 businesses, large and small, had applied for payments covering over four million furloughed workers. However, the latest estimate is that “just shy of 30 million” employees could benefit from the CJRS.

 

In this context ‘furloughed workers’ are non-working employees (including part timers and employees on agency, flexible or zero hours contracts) who are kept on the payroll, rather than being laid off. The employee must be furloughed for at least three consecutive weeks. The employer has to designate these employees and submit relevant information to HMRC via a “new online portal” available “by the end of April”. The HMRC payments will cover 80% of “usual monthly wages” plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

Employees who left or were made redundant after 28 February can be re-employed and placed on furlough, with the (former) employer then claiming under the CJRS for their wages through the scheme. This applies even if re-employment does not start until after 19 March.

The CJRS is available to one person companies whose director/owner furloughs themselves. However, only salary is covered, not dividends, and like all other furloughed workers, the director “cannot undertake work for or on behalf of the organisation”. According to press reports the Treasury nevertheless accepts that the director may continue with their statutory obligations in that role. Despite much lobbying, the Treasury continues to resist any relaxation of the CJRS’s focus on salary alone. 

NEW

The question of what happens to the CJRS after 30 June is coming to the fore, with business leaders pointing to the 45-day redundancy process meaning that clarity is required by mid-May. The Treasury is reported to be in discussions on the issue and rumoured solutions include a gradual phasing down of coverage (e.g. to 60%, then 40% of pay) and/or narrowing the scheme’s focus to concentrate on sectors that will not reopen in the early stages (e.g. hospitality).

Statutory sick pay (SSP)

Businesses with fewer than 250 employees as at 28 February 2020 will be refunded the full cost of providing SSP to any employee off work for up to 14 days because of coronavirus.

Loan guarantees

A government-backed loan guarantee scheme announced in the Budget has since been regularly extended and enhanced. What started as two schemes on 11 March has become five with the announcement of Bounce Back Loans on 27 April (see below). The Government will provide loan guarantees up to “an initial” £330 billion for all sizes of businesses. In all instances businesses remain responsible for repaying any facility they may takeout – any guarantees are for the lender:

  • For large firms (with more than £45million turnover), the Bank of England has launched a Covid Corporate Financing Facility (CCFF), which “will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy”. The company must satisfy Bank of England lending criteria, which originally meant having an investment grade credit rating from a ratings agency but has since been changed to also allow lending banks to judge credit worthiness. However, the ultimate decision remains with the Bank of England. As at 27 April, over £14 billion had been provided under the CCFF.
  •  For medium sized businesses (turnover between £45 million and £500 million)  On 3 April the Chancellor announced the Coronavirus Large Business Interruption Loan Scheme (CLBILS). The scheme is due to launch later in April and will fill a finance gap that had emerged between the two existing loan support schemes. The CLBILS will have a loan ceiling of £25 million and is targeted at businesses that are too large for the CBILS (see below) but fail to meet the criteria for the CCFF. The new scheme will provide a government guarantee of 80% on individual loans and other forms of finance (e.g. overdrafts) for businesses.

The aim is to provide support for businesses that were viable before the Covid-19 pandemic but now face significant cash flow difficulties that would otherwise make their business unviable in the short term. Lenders will be expected to conduct their usual credit risk checks and charge commercial rates of interest.

  • For small and medium sized businesses (turnover up to £45m) The loan limit on the Coronavirus Business Interruption Loan Scheme (CBILS) is £5 million (originally £1.2 million), with no interest charged for the first twelve months and lender-levied fees will be covered. The scheme is delivered over 40 accredited commercial lenders, backed by the British Business Bank. Eligible SMEs must be UK-based and meet “the other British Business Bank eligibility criteria”. The government has made clear that this now means the CBILS is available to all SME businesses affected by Covid-19 and not just those unable to secure regular commercial financing elsewhere. Finance under the scheme can take the form of term loans, overdrafts, invoice finance and asset finance.

Lenders cannot require personal guarantees on borrowing of under £250,000, nor can primary residential property be taken as security under the scheme. When a personal guarantee is required, it is capped at 20% of the outstanding value of the loan. As at 27 April, the CBILS had provided £3.4 billion of loans to 20,000 businesses. Applications received had reached over 60,000, although initial inquiries had exceeded 300,000. The current acceptance rate is over 80%, according to the Chancellor in his statement made on 27 April.

NEW

  • For small business On 27 April the Chancellor announced a new Bounce Back Loan Scheme (BBLS). This will provide micro loans of between £2,000 and £50,000 (subject to a ceiling of 25% of turnover) with the government supplying a 100% guarantee for lenders. No interest will be charged in the first 12 months and ‘for most firms, loans should arrive within 24 hours of approval’. There will be no forward-looking tests of business viability, nor will there be any “complex eligibility criteria”.

The BBLS will be run by the British Business Bank and will be open for business from 9.00am on Monday 4 May. The standard application form will be two pages long. Guidance on how to apply when the time comes can be found here.

NEW

In his statement of 27 April, the Chancellor said that for both the CBILS and CLBILS, “A statement will be issued shortly by UK Finance confirming that banks will not require from businesses the provision of forward-looking financial information or business plans”. This addresses the problem many businesses, particularly in the hospitality sector, had found when applying for finance, given that there is as yet no government guidance on how and when lockdown will be unwound. The Chancellor also removed a constraint which had hindered some banks: there will no longer be a 60% ceiling on the amount of a lender’s business interruption scheme loan book covered by government guarantees.

Support package for innovative firms

On 20 April the Chancellor announced a two-part support package for ‘innovative firms’, which means mainly start-ups and other venture capital backed business that would be unable to raise CBLIS or CLBILS finance.

  • The Future Fund will launch in May and be delivered with the British Business Bank. The fund will provide loans between £125,000 and £5 million, with private investors at least matching the government commitment. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.

To be eligible, a business must be an unlisted, UK registered and UK based company that has previously raised at least £250,000 in equity investment from third party investors in the last five years. To begin with the government is committing £250 million to the scheme. It will initially be open until the end of September, with its scale kept under review.

  • Targeted Support for Research and Development (R&D) £750 million of targeted support for the most R&D intensive small and medium size firms will be made available through a grants and loan scheme operated by Innovate UK, the national innovation agency.
  • Innovate UK will accelerate up to £200 million of grant and loan payments for its 2,500 existing customers on an opt-in basis. An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding. The first payments will be made by mid-May.

 Deferral of VAT and Income Tax Payments  

For the period between 20 March 2020 and 30 June 2020, businesses will not be required to make a VAT payment. Instead they will be able to defer this payment until the end of the 2020/21. VAT refunds and reclaims will be paid by the government as normal. No applications will be required as the process will be automatic.

Self assessment income tax payments due on the 31 July 2020 (the second payment on account for 2019/20) will be deferred until the 31 January 2021. This also will not require an application and is not limited to just the self-employed, although the Treasury says “If you are still able to pay your second payment on account on 31 July you should do so”. Penalties and interest for late payment will not be charged in the deferral period.

Business Rates Retail Discount 

All shops, cinemas, restaurants, music venues and business operating in the leisure and hospitality sectors will have no business rates to pay in 2020/21.

Grant Funding Schemes

There are two grant schemes based on rateable values:

  • Small Business Grant Fund All eligible businesses in England in receipt of either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000.
  • Retail, Hospitality and Leisure Grant Eligibility All eligible businesses in England in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure) with a rateable value of up to than £15,000 will be eligible for a cash grants of £10,000 per property and those with a rateable value of more than £15,000 but less than £51,000 will be eligible for a cash grant of £25,000 per property.

Nursery businesses that pay business rates

For nursery school businesses based in England, there will be a business rates holiday for 2020/21. The nursery property must be:

  • occupied by providers on Ofsted’s Early Years Register
  • wholly or mainly used for the provision of the Early Years Foundation Stage

Commercial insurance

The question of the extent to which any insurance policy provides cover for the Covid-19 outbreak has proved contentious. Pandemic cover is not a feature of most business disruption cover, a point underlined by the Association of British Insurers (ABI) in a statement it issued on 17 March. The ABI has since launched an information hub dealing with the impact of the virus on a range of insurance policies, from trade credit to private health.

On 15 April the Financial Conduct Authority (FCA) issued a ‘Dear CEO’ letter to insurers, setting out its expectations of regulated firms and a reminder that for some SMEs, complaints will fall within the remit of the Financial Ombudsman Service.

Off-payroll working in the private sector (IR35)

On 17 March, the Chief Secretary to the Treasury, Steve Barker, said in a statement to the House of Commons that the start date for the new IR35 tax rules would be deferred to
6 April 2021.

Time to Pay (TTP)

In the Budget, the Chancellor announced that HMRC would scale up its Time to Pay service, giving businesses and the self-employed the chance to defer tax payments. As at 27 April, over 60,000 businesses and individuals had agreed TTP arrangements with HMRC.

Protection from property forfeiture, winding up orders and statutory demands

Commercial tenants who cannot pay their rent because of Covid-19 are protected from forfeiture of their business property if they miss a payment up until 30 June 2020. Reports suggest that to date only about half of the commercial property rents due on Lady Day (25 March) have been paid.

On 23 April the government announced that landlords would not be able to make statutory demands between 1 March and 30 June or present winding up petitions between 27 April and 30 June “where a company cannot pay its bills due to coronavirus”. The government also promised secondary legislation to prevent landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.

The next quarter day for rental payment is Midsummer Day, 24 June 2020.

Going concern

The Financial Reporting Council (FRC) has issued financial guidance in conjunction with the Financial Conduct Authority (FCA) and Prudential Regulatory Authority. This includes extensive information for auditors covering areas such as how to deal the question of whether a business is a going concern.

Wrongful Trading and business restructuring

On 28 March the UK Business secretary announced changes to insolvency law “to enable UK companies undergoing a rescue or restructure process to continue trading, giving them breathing space that could help them avoid insolvency”.

The wrongful trading law is being temporarily suspended, retrospective from 1 March 2020. for three months. This gives company directors the ability to keep their businesses in being without risking personal liability.

Scotland, Wales and Northern Ireland

Some elements of business support are devolved:

  • Guidance for Scotland is here
  • Guidance for Wales is here
  • Guidance for Northern Ireland is here

Government guidance for employers and businesses is here.

The government’s business support finder tool is here.

 

Measures for individuals

Mortgage holidays

For people who find themselves in financial difficulties because of coronavirus, mortgage lenders will offer at least a three-month mortgage holiday. This holiday extends to buy-to-let landlords.

Personal loans, credit cards and overdrafts

The FCA announced temporary measures, effective from 14 April, which expect firms providing consumer finance to:

  • Offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by Covid-19.
  • Allow customers who are negatively impacted by Covid-19 and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months.
  • Make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force.
  • Ensure consumers using any of these temporary payment freeze measures will not have their credit file affected.

 

NEW

Motor finance and high cost credit

On 24 April the FCA introduced a package of measures covering how companies providing motor finance and ‘high cost finance’ (for example, payday loans and pawnbroking) should treat customers. There is now a requirement to grant those facing financial difficulties because of Covid-19 a three-month payment freeze for motor finance, buy-now pay-later (BNPL), rent-to-own (RTO) and pawnbroking agreements. The FCA say that firms offering motor finance should not alter Personal Contract Purchase (PCP) or Personal Contract Hire (PCH) agreements in a way that is unfair.

For high cost credit, including payday loans, a one month interest-free payment freeze applies to affected borrowers.

FCA consumer guidance is available here.

Protection from eviction

Private and social landlords will not be able to start proceedings to evict tenants for the period to 30 September 2020.

 

Statutory sick pay (SSP)

SSP is currently paid at the rate of £95.85 a week. It is now available to employees from day one, instead of day four, for those who are suffering from the virus or who have been advised to self-isolate. There has been no change in the minimum earnings threshold for SSP (£120 a week in 2020/21).

Individuals ineligible for SSP

Self-employed and gig economy workers generally do not qualify for SSP. Instead they may be entitled to Contributory Employment and Support Allowance.

Covid-19 sufferers and self-isolators will be able to claim the benefit from day one instead of day eight. The Minimum Income Floor in Universal Credit (UC) has been temporarily removed to ensure that time off work because of sickness is reflected in benefits.

For 12 months from 6 April 2020, the standard allowance in Universal Credit (UC) and the basic element in Working Tax Credit (WTC) for will be increased by the equivalent of about £20 a week over and above annual uprating (which were to £323.22 per month for UC for age 25 and over and £1,995 a year for WTC for 2020/21). This effectively brings UC into line with the rate of SSP. The change applies to all new and existing UC claimants and to existing WTC claimants.

Housing benefit

Housing benefit and the housing element of UC will be increased so that the Local Housing Allowance will cover at least 30% of market rents.

Hardship Fund

The Chancellor announced in the Budget a £500 million Hardship Fund, which would be distributed to Local Authorities so that they could support the vulnerable.

Government guidance for employees is here.

Government guidance on claiming benefits is here.

Main provisions for the self-employed

On Thursday 26 March, Chancellor Rishi Sunak made his long-awaited statement about the Covid-19 government support scheme for the self-employed, called the Self-employment Income Support Scheme (SEISS). Reports suggest that the announcement had been slow to arrive because of the greater difficulty in structuring and running a scheme that relied on annual information (via tax returns) and could not operate via the PAYE system.

SEISS provisions

The SEISS will pay a directly payable taxable grant to the self-employed (including members of partnerships) based on 80% of profits averaged over the last three tax years (or shorter periods if self-employment started after 2016/17), subject to a maximum of £2,500 a month.

  • The initial payment term of the SEISS grant will be “at least three months”.
  • The payment of the grant will not prevent the claimant from continuing to work.

 

Restrictions on the SEISS

The SEISS will be restricted in five ways:

  1. Self-employment must provide the majority of the claimant’s income (based on the period used for the £50,000 test set out below).
  2. Trading profits either:
  • were no more than £50,000 in 2018/19; or
  • trading profit were no more than £50,000 averaged over the three tax years from 2016/17. If trading started between 2016-19, HMRC will only use those years for which a Self-Assessment tax return has been filed.

According to the Chancellor, these thresholds mean the scheme covers 95% of the self-employed. The corollary is that it creates a cliff edge at £50,000, a figure that appears elsewhere in the tax system (e.g. the higher rate tax threshold).

  1. The claimant must have submitted a 2019 tax return (covering the 2018/19 tax year). As a concession, any later filer will have four weeks to submit their overdue return if they wish to be included in the scheme.
  2. The claimant must have traded in 2019/20 and still be trading when making the application (unless affected by Covid-19)
  3. The claimant must have lost trading profits due to Covid-19.

HMRC will use their existing information to assess eligibility and contact individuals directly, requesting completion of “a simple online form”. A gov.uk webpage gives more details, but is somewhat confusingly headed “Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme”. The “don’t call us, we’ll call you” approach is aimed at preventing HMRC being overwhelmed with telephone queries, as has happened with the DWP’s Universal Credit system. HMRC are aiming to contact eligible people “by mid May 2020”. More detailed guidance is due to be issued in the week commencing 27 April.

Timing of payments

Payments from HMRC should start at the beginning of June. The initial sum will represent three months’ cumulative payments. Until then the self-employed can claim Universal Credit. In his statement the Chancellor said Universal Credit could give a self-employed person with a non-working partner and two children, living in the social rented sector, support of up to £1,800 a month.

Anyone whose self-employment started after 5 April 2019 and thus has no self-employed earnings recorded with HMRC cannot benefit from the scheme and must rely on Universal Credit.

One-person companies

Those who operate through one person companies are not covered by the scheme as, despite the media label often given to them, they are not self-employed. The Treasury press release states that such people “will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes”. The use of the word ‘salary’ is key here, as many one person companies route the bulk of their employee’s remuneration via dividends to reduce National Insurance liabilities (see CJRS above).

In his closing remarks the Chancellor noted that “…in devising this scheme … it is now much harder to justify the inconsistent contributions between people of different employment statuses”. This was a subtle way of suggesting that National Insurance contributions will have to rise for the self-employed once the crisis is over.

UPDATED

Reports have suggested that the Small Business Minister is lobbying for a change on the approach to dividends, but meeting Treasury resistance. One potential problem appears to be that HMRC cannot easily distinguish between ‘remuneration’ dividends and dividends originating from normal investment. In his comments following his statement on 27 April the Chancellor remained unwilling to extend the CJRS to cover dividend payments.

Coronavirus Act

The day before the Chancellor’s latest statement, the Coronavirus Act 2020 received Royal Assent. This 348-page Act deals with a broad range of Covid-19 related measures (many of which exclude Scotland because of its devolved powers), including:

  • Food supply.
  • Statutory Sick Pay (SSP) modifications, e.g. funding of the employer’s liabilities.
  • Suspension of the complex abatement rules that either reduce or suspend NHS pensions on an individual’s return to work.
  • Uprating of working tax credit.
  • Protection from eviction for residential tenancies to 30 September 2020.
  • Protection from forfeiture for commercial tenancies to 30 June 2020.

 

The explanatory notes for the original Bill (introduced on 19 March ) are here.

Updated government Covid-19 guidance on business support is here and for employees is here.

Image Courtesy of Flickr_Ishan Manjrekar

Covid-19 measures: to 20 April 2020 UPDATED

Changes since last bulletin on 3 April 2020

  • Cut-off date for individual eligibility for Coronavirus Job Retention Scheme (CJRS) moved to 19 March 2020.
  • CJRS extended to 30 June.
  • Revised eligibility requirements for Self-employed Income Support Scheme.
  • New £1.25 billion support package for innovative firms
  • CBILS loans now total £1.1 billion.
  • Clarification of grant funded schemes.
  • FCA ‘Dear CEO’ letter to insurance companies.
  • FCA temporary measures covering loans, credit cards and other personal finance’
  • Many hypertext links updated.

Background

The 11 March Budget from the Chancellor, Rishi Sunak, included £7 billion of expenditure targeting the impact of Covid-19 on employees, the self-employed and businesses. On 17 March a further raft of measures was announced, amounting to an additional £20 billion of support expenditure plus £330 billion of loan guarantees.

Between 20 March and 26 March, the Chancellor made three separate rounds of announcements, including measures to support retention of employees, a range of financing options and an income replacement scheme for the self-employed. In many instances, the devolved governments have followed suit, with funds provided from Westminster under the Barnett formula.

Guidance on measures have regularly been issued as queries have been raised and clarifications sought. As a result, what was originally announced could well differ from what now applies, for example, in the cut-off date for the job retention scheme.

We have pulled together a round-up of the various announcements so far for businesses and individuals including useful links to government sites and added new details where released, including announcements through to 20 April.

Measures for business

Coronavirus Job Retention Scheme (CJRS)

Some form of job support scheme had been expected after the 17 March announcement and the CJRS is similar to schemes that have already been set up elsewhere in Europe. Under the CJRS, “HMRC will reimburse 80% of a furloughed worker’s wage costs, up to a cap of £2,500 per month’, provided the worker was on the employer’s PAYE payroll on or before 19 March 2020 and was notified to HMRC on an RTI submission by that date. The cut-off date was originally announced as 28 February but was changed to 19 March (the day before the Chancellor announced the CJRS) on 15 April.

The time frame for the CJRS was extended to the end of June on 17 April, with the scheme opening to applications from 20 April.

In this context ‘furloughed workers’ are non-working employees (including part timers and employees on agency, flexible or zero hours contracts) who are kept on the payroll, rather than being laid off. The employee must be furloughed for at least three consecutive weeks. The employer has to designate these employees and submit relevant information to HMRC via a “new online portal” available “by the end of April”. The HMRC payments will cover 80% of “usual monthly wages” plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

NEW

Employees who left or were made redundant after 28 February can be re-employed and placed on furlough, with the (former) employer then claiming under the CJRS for their wages through the scheme. This applies even if re-employment does not start until after 19 March.

The CJRS is available to one person companies whose director/owner furloughs themselves. However, only salary is covered, not dividends, and like all other furloughed workers, the director “cannot undertake work for or on behalf of the organisation”. According to press reports the Treasury nevertheless accepts that the director may continue with their statutory obligations in that role.

Statutory sick pay (SSP)

Businesses with fewer than 250 employees as at 28 February 2020 will be refunded the full cost of providing SSP to any employee off work for up to 14 days because of coronavirus.

Loan guarantees

A government-backed loan guarantee scheme announced in the Budget has since been regularly extended and enhanced. The Government will now provide loan guarantees up to “an initial” £330 billion for all sizes of businesses. In all instances businesses remain responsible for repaying any facility they may takeout – any guarantees are for the lender:

  • For large firms (with more than £4 5million turnover), the Bank of England has launched a Covid Corporate Financing Facility (CCFF), which “will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy”. The company must satisfy Bank of England lending criteria, which originally meant having an investment grade credit rating from a ratings agency but has since been changed to also allow lending banks to judge credit worthiness. However, the ultimate decision remains with the Bank of England. As at 3 April, about £3.5 billion had either been provided or committed.
  •  For medium sized businesses (turnover between £45 million and £500 million)  On 3 April the Chancellor announced the Coronavirus Large Business Interruption Loan Scheme (CLBILS). The scheme is due to launch later in April and will fill a finance gap that had emerged between the two existing loan support schemes. The CLBILS will have a loan ceiling of £25 million and is targeted at businesses that are too large for the CBILS (see below) but fail to meet the criteria for the CCFF. The new scheme will provide a government guarantee of 80% on individual loans and other forms of finance (e.g. overdrafts) for businesses.

The aim is to provide support for businesses that were viable before the Covid-19 pandemic but now face significant cash flow difficulties that would otherwise make their business unviable in the short term. Lenders will be expected to conduct their usual credit risk checks and charge commercial rates of interest.

  • For small and medium sized businesses (turnover up to £45m) The loan limit on the Coronavirus Business Interruption Loan Scheme (CBILS) is £5 million (originally £1.2 million), with no interest charged for the first twelve months and lender-levied fees will be covered. The scheme is delivered through 40 accredited commercial lenders, backed by the British Business Bank. Eligible SMEs must be UK-based and meet “the other British Business Bank eligibility criteria”. The government has made clear that this now means the CBILS is available to all SME businesses affected by Covid-19 and not just those unable to secure regular commercial financing elsewhere.  Lenders cannot require personal guarantees on borrowing of under £250,000, nor can primary residential property be taken as security under the scheme. When a personal guarantee is required, it is capped at 20% of the outstanding value of the loan. As at 15 April, the CBILS had provided £1.1 billion of loans to just over 6,000 businesses. Applications received had reached nearly 28,500, although inquiries had exceeded 300,000.

NEW

Support package for innovative firms

On 20 April the Chancellor announced a two-part support package for ‘innovative firms’, which means mainly start-ups and other venture capital backed business that would be unable to raise CBLIS or CLBILS finance.

  • The Future Fund will launch in May and be delivered with the British Business Bank. The fund will provide loans between £125,000 and £5 million, with private investors at least matching the government commitment. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.

 To be eligible, a business must be an unlisted, UK registered and UK based company that has previously raised at least £250,000 in equity investment from third party investors in the last five years. To begin with the government is committing £250 million to the scheme. It will initially be open until the end of September, with its scale kept under review.

  • Targeted Support for Research and Development (R&D) £750 million of targeted support for the most R&D intensive small and medium size firms will be made available through a grants and loan scheme operated by Innovate UK, the national innovation agency.
  • Innovate UK will accelerate up to £200 million of grant and loan payments for its 2,500 existing customers on an opt-in basis. An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding. The first payments will be made by mid-May.

 Deferral of VAT and Income Tax Payments  

For the period between 20 March 2020 and 30 June 2020, businesses will not be required to make a VAT payment. Instead they will be able to defer this payment until the end of the 2020/21. VAT refunds and reclaims will be paid by the government as normal. No applications will be required as the process will be automatic.

Self assessment income tax payments due on the 31 July 2020 (the second payment on account for 2019/20) will be deferred until the 31 January 2021. This also will not require an application and is not limited to just the self-employed, although the Treasury says “If you are still able to pay your second payment on account on 31 July you should do so”. Penalties and interest for late payment will not be charged in the deferral period.

Business Rates Retail Discount 

All shops, cinemas, restaurants, music venues and business operating in the leisure and hospitality sectors will have no business rates to pay in 2020/21.

Grant Funding Schemes

There are two grant schemes based on rateable values:

  • Small Business Grant Fund All eligible businesses in England in receipt of either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000.
  • Retail, Hospitality and Leisure Grant Eligibility All eligible businesses in England in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure) with a rateable value of up to than £15,000 will be eligible for a cash grants of £10,000 per property and those with a rateable value of more than £15,000 but less than £51,000 will be eligible for a cash grant of £25,000 per property.

Nursery businesses that pay business rates

For nursery school businesses based in England, there will be a business rates holiday for 2020/21. The nursery property must be:

  • occupied by providers on Ofsted’s Early Years Register
  • wholly or mainly used for the provision of the Early Years Foundation Stage.

 Commercial insurance

The question of the extent to which any insurance policy provides cover for the Covid-19 outbreak has proved contentious. Pandemic cover is not a feature of most business disruption cover, a point underlined by the Association of British Insurers (ABI) in a statement it issued on 17 March. The ABI has since launched an information hub dealing with the impact of the virus on a range of insurance policies, from trade credit to private health.

NEW

On 15 April the Financial Conduct Authority (FCA) issued a ‘Dear CEO’ letter to insurers, setting out its expectations of regulated firms and a reminder that for some SMEs, complaints will fall within the remit of the Financial Ombudsman Service.

Off-payroll working in the private sector (IR35)

On 17 March, the Chief Secretary to the Treasury, Steve Barker, said in a statement to the House of Commons that the start date for the new IR35 tax rules would be deferred to
6 April 2021.

Time to Pay (TTP)

In the Budget, the Chancellor announced that HMRC would scale up its Time to Pay service, giving businesses and the self-employed the chance to defer tax payments.

Protection from property forfeiture

Commercial tenants who cannot pay their rent because of COVID-19 are protected from forfeiture of their business property if they miss a payment up until 30 June 2020. Reports suggest that only 40% of the commercial property rents due on Lady Day (25 March) were paid on time.

Going concern

The Financial Reporting Council (FRC) has issued financial guidance in conjunction with the Financial Conduct Authority (FCA) and Prudential Regulatory Authority. This includes extensive information for auditors covering areas such as how to deal the question of whether a business is a going concern.

Wrongful Trading and business restructuring

On 28 March the UK Business secretary announced changes to insolvency law “to enable UK companies undergoing a rescue or restructure process to continue trading, giving them breathing space that could help them avoid insolvency”.

The wrongful trading law is being temporarily suspended, retrospective from 1 March 2020. for three months. This gives company directors the ability to keep their businesses in being without risking personal liability.

Scotland, Wales and Northern Ireland

Some elements of business support are devolved:

  • Guidance for Scotland is here
  • Guidance for Wales is here
  • Guidance for Northern Ireland is here

Government guidance for employers and businesses is here.

Measures for individuals

Mortgage holidays

For people who find themselves in financial difficulties because of coronavirus, mortgage lenders will offer at least a three-month mortgage holiday. This holiday extends to buy-to-let landlords.

NEW

Personal loans, credit cards and overdrafts

The FCA announced temporary measures, effective from 14 April, which expect firms providing consumer finance to:

  • Offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by Covid-19.
  • Allow customers who are negatively impacted by Covid-19 and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months.
  • Make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force.
  • Ensure consumers using any of these temporary payment freeze measures will not have their credit file affected.

FCA consumer guidance is available here.

Protection from eviction

Private and social landlords will not be able to start proceedings to evict tenants for the period to 30 September 2020.

Statutory sick pay (SSP)

SSP is currently paid at the rate of £95.85 a week. It is now available to employees from day one, instead of day four, for those who are suffering from the virus or who have been advised to self-isolate. There has been no change in the minimum earnings threshold for SSP (£120 a week in 2020/21).

Individuals ineligible for SSP

Self-employed and gig economy workers generally do not qualify for SSP. Instead they may be entitled to Contributory Employment and Support Allowance.

Covid-19 sufferers and self-isolators will be able to claim the benefit from day one instead of day eight. The Minimum Income Floor in Universal Credit (UC) has been temporarily removed to ensure that time off work because of sickness is reflected in benefits.

For 12 months from 6 April 2020, the standard allowance in Universal Credit (UC) and the basic element in Working Tax Credit (WTC) for will be increased by the equivalent of about £20 a week over and above annual uprating (which were to £323.22 per month for UC for age 25 and over and £1,995 a year for WTC for 2020/21). This effectively brings UC into line with the rate of SSP. The change applies to all new and existing UC claimants and to existing WTC claimants.

Housing benefit

Housing benefit and the housing element of UC will be increased so that the Local Housing Allowance will cover at least 30% of market rents.

Hardship Fund

The Chancellor announced in the Budget a £500 million Hardship Fund, which would be distributed to Local Authorities so that they could support the vulnerable.

NEW

Motor finance and high cost credit

On 17 April the FCA issued draft guidance on how companies providing motor finance and ‘high cost finance’ (for example, payday loans and pawnbroking) should treat customers. The main proposal is a three-month payment freeze, other than for high cost credit, which would be subject to a one month interest-free payment freeze. The FCA expects to finalise proposals by Friday 24 April 2020, which would come into force shortly afterwards.

Government guidance for employees is here.

Government guidance on claiming benefits is here.

Main provisions for the self-employed

On Thursday 26 March, Chancellor Rishi Sunak made his long-awaited statement about the Covid-19 government support scheme for the self-employed, called the Self-employment Income Support Scheme (SEISS). Reports suggest that the announcement had been slow to arrive because of the greater difficulty in structuring and running a scheme that relied on annual information (via tax returns) and could not operate via the PAYE system.

SEISS provisions

The SEISS will pay a directly payable taxable grant to the self-employed (including members of partnerships) based on 80% of profits averaged over the last three tax years (or shorter periods if self-employment started after 2016/17), subject to a maximum of £2,500 a month.

  • The initial payment term of the SEISS grant will be “at least three months”.
  • The payment of the grant will not prevent the claimant from continuing to work.

 

UPDATED

Restrictions on the SEISS

The SEISS will be restricted in five ways:

  1. Self-employment must provide the majority of the claimant’s income (based on the period used for the £50,000 test set out below).
  2. Trading profits either:
  • were no more than £50,000 in 2018/19; or
  • trading profit were no more than £50,000 averaged over the three tax years from 2016/17. If trading started between 2016-19, HMRC will only use those years for which a Self-Assessment tax return has been filed.

According to the Chancellor, these thresholds mean the scheme covers 95% of the self-employed. The corollary is that it creates a cliff edge at £50,000, a figure that appears elsewhere in the tax system (e.g. the higher rate tax threshold).

  1. The claimant must have submitted a 2019 tax return (covering the 2018/19 tax year). As a concession, any later filer will have four weeks to submit their overdue return if they wish to be included in the scheme.
  2. The claimant must have traded in 2019/20 and still be trading when making the application (unless affected by Covid-19)
  3. The claimant must have lost trading profits due to Covid-19.

HMRC will use their existing information to assess eligibility and contact individuals directly, requesting completion of “a simple online form”. A gov.uk webpage gives more details, but is somewhat confusingly headed “Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme”. The “don’t call us, we’ll call you” approach is aimed at preventing HMRC being overwhelmed with telephone queries, as has happened with the DWP’s Universal Credit system. HMRC are aiming to contact eligible people “by mid May 2020”.

Timing of payments

Payments from HMRC should start at the beginning of June. The initial sum will represent three months’ cumulative payments. Until then the self-employed can claim Universal Credit. In his statement the Chancellor said Universal Credit could give a self-employed person with a non-working partner and two children, living in the social rented sector, support of up to £1,800 a month.

Anyone whose self-employment started after 5 April 2019 and thus has no self-employed earnings recorded with HMRC cannot benefit from the scheme and must rely on Universal Credit.

One-person companies

Those who operate through one person companies are not covered by the scheme as, despite the media label often given to them, they are not self-employed. The Treasury press release states that such people “will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes”. The use of the word ‘salary’ is key here, as many one person companies route the bulk of their employee’s remuneration via dividends to reduce National Insurance liabilities (see CJRS above).

In his closing remarks the Chancellor noted that “…in devising this scheme … it is now much harder to justify the inconsistent contributions between people of different employment statuses”. This was a subtle way of suggesting that National Insurance contributions will have to rise for the self-employed once the crisis is over.

UPDATED

Recent reports have suggested that the Small Business Minister is lobbying for a change on the approach to dividends, but meeting Treasury resistance. One potential problem appears to be that HMRC cannot easily distinguish between ‘remuneration’ dividends and dividends originating from normal investment.

Coronavirus Act

The day before the Chancellor’s latest statement, the Coronavirus Act 2020 received Royal Assent. This 348-page Act deals with a broad range of Covid-19 related measures (many of which exclude Scotland because of its devolved powers), including:

  • Food supply.
  • Statutory Sick Pay (SSP) modifications, e.g. funding of the employer’s liabilities.
  • Suspension of the complex abatement rules that either reduce or suspend NHS pensions on an individual’s return to work.
  • Uprating of working tax credit.
  • Protection from eviction for residential tenancies to 30 September 2020.
  • Protection from forfeiture for commercial tenancies to 30 June 2020.

The explanatory notes for the original Bill (introduced on 19 March) are here.

Updated government Covid-19 guidance on business support is here and for employees is here.

 

Image courtesy of WooWork.com, Flickr

Covid-19 measures: to 3 April 2020 (updated)

Covid-19 measures: to 3 April 2020

The 11 March Budget from the Chancellor, Rishi Sunak, included £7 billion of expenditure targeting the impact of Covid-19 on employees, the self-employed and businesses. On 17 March a further raft of measures was announced, amounting to an additional £20 billion of support expenditure plus £330 billion of loan guarantees.

By 20 March another round of support was announced of such size that no price tag was attached. On 26 March the much-awaited package for the self-employed was announced. There has since been a steady trickle of clarifications and fresh announcements from the Treasury and other parts of the government.

We have pulled together a round-up of the various announcements so far for businesses and individuals including useful links to government sites and added new details where released including announcements through 3 April.

Measures for business

Coronavirus Job Retention Scheme (CJRS)

Some form of job support scheme had been expected after the 17 March announcement and the CJRS is similar to schemes that have already been set up elsewhere in Europe. Under the CJRS, “HMRC will reimburse 80% of a furloughed worker’s wage costs, up to a cap of £2,500 per month’, provided the worker was on the employer’s PAYE payroll on
28 February 2020.

In this context ‘furloughed workers’ are non-working employees (including part timers and employees on agency, flexible or zero hours contracts) who are kept on the payroll, rather than being laid off. The employer has to designate these employees and submit relevant information to HMRC via a “new online portal”. The HMRC payments will cover 80% of “usual monthly wages” plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

The CRJS is available to one person companies whose director/owner furloughs themselves. However, only salary is covered, not dividends, and like all other furloughed workers, the director “cannot undertake work for or on behalf of the organisation”. According to press reports the Treasury nevertheless accepts that the director may continue with their statutory obligations in that role.

Statutory sick pay (SSP)

Businesses with fewer than 250 employees as at 28 February 2020 will be refunded the full cost of providing SSP to any employee off work for up to 14 days because of coronavirus.

Loan guarantees

A government-backed loan guarantee scheme announced in the Budget has since been regularly extended and enhanced. The Government will now provide loan guarantees up to “an initial” £330 billion for all sizes of businesses. In all instances businesses remain responsible for repaying any facility they may takeout – any guarantees are for the lender:

  • For large firms (with more than £4 5million turnover), the Bank of England has launched a Covid Corporate Financing Facility (CCFF), which “will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy”. The company must satisfy Bank of England lending criteria, which originally meant having an investment grade credit rating from a ratings agency but has since been changed to also allow lending banks to judge credit worthiness. However, the ultimate decision remains with the Bank of England. As at 3 April, about £3.5 billion had either been provided or committed.
  •  For medium sized businesses (turnover between £45 million and £500 million)  On 3 April the Chancellor announced the Coronavirus Large Business Interruption Loan Scheme (CLBILS). The scheme is due to launch later in April and will fill a finance gap that had emerged between the two existing loan support schemes. The CLBILS will have a loan ceiling of £25 million and is targeted at businesses that are too large for the CBILS (see below) but fail to meet the criteria for the CCFF. The new scheme will provide a government guarantee of 80% on individual loans and other forms of finance (e.g. overdrafts) for businesses.

The aim is to provide support for businesses that were viable before the Covid-19 pandemic but now face significant cash flow difficulties that would otherwise make their business unviable in the short term. Lenders will be expected to conduct their usual credit risk checks and charge commercial rates of interest.

  • For small and medium sized businesses (turnover up to £45m) The loan limit on the Coronavirus Business Interruption Loan Scheme (CBILS) is now £5 million, with no interest charged for the first twelve months and lender-levied fees will be covered. The scheme is delivered through 40 accredited commercial lenders, backed by the British Business Bank. Eligible SMEs must be UK-based and meet “the other British Business Bank eligibility criteria”. The government has made clear that this now means the CBILS is available to all SME businesses affected by Covid-19 and not just those unable to secure regular commercial financing elsewhere.  Lenders cannot require personal guarantees on borrowing of under £250,000, nor can primary residential property be taken as security under the scheme. When a personal guarantee is required, it is capped at 20% of the outstanding value of the loan.  As at 3 April, the CBILS had provided £90 million of loans to nearly 1,000 businesses.

Deferral of VAT and Income Tax Payments  

For the period between 20 March 2020 and 30 June 2020, businesses will not be required to make a VAT payment. Instead they will be able to defer this payment until the end of the 2020/21. VAT refunds and reclaims will be paid by the government as normal. No applications will be required as the process will be automatic.

Self assessment income tax payments due on the 31 July 2020 (the second payment on account for 2019/20) will be deferred until the 31 January 2021. This also will not require an application and is not limited to just the self-employed, although the Treasury says “If you are still able to pay your second payment on account on 31 July you should do so”. Penalties and interest for late payment will not be charged in the deferral period.

Business Rates Retail Discount 

All shops, cinemas, restaurants, music venues and business operating in the leisure and hospitality sectors will have no business rates to pay in 2020/21.

On 17 March the Chancellor also promised an additional cash grant of “up to £25,000 per business” to businesses with a rateable value of less than £51,000 – i.e. those that would have benefited from the old version of the Business Rates Retail Discount Scheme.

Businesses already eligible for small business rates relief (SBBR)

There will a flat £10,000 cash grant for each business based in England that already benefits from zero or reduced business rates because of small business rate relief.

Nursery businesses that pay business rates

For nursey school businesses based in England, there will be a business rates holiday for 2020/21. The nursery property must be:

  • occupied by providers on Ofsted’s Early Years Register
  • wholly or mainly used for the provision of the Early Years Foundation Stage.

 

Commercial insurance

The question of the extent to which any insurance policy provides cover for the Covid-19 outbreak has proved contentious. Pandemic cover is not a feature of most business disruption cover, a point underlined by the Association of British Insurers (ABI) in a statement it issued on 17 March. The ABI has since launched an information hub dealing with the impact of the virus on a range of insurance policies, from trade credit to private health.  

Off-payroll working in the private sector (IR35)

On 17 March, the Chief Secretary to the Treasury, Steve Barker, said in a statement to the House of Commons that the start date for the new IR35 tax rules would be deferred to
6 April 2021.

Time to Pay (TTP)

In the Budget, the Chancellor announced that HMRC would scale up its Time To Pay service, giving businesses and the self-employed the chance to defer tax payments.

Protection from property forfeiture

Commercial tenants who cannot pay their rent because of COVID-19 are protected from forfeiture of their business property if they miss a payment up until 30 June 2020.

Going concern

The Financial Reporting Council (FRC) has issued financial guidance in conjunction with the Financial Conduct Authority (FCA) and Prudential Regulatory Authority. This includes extensive information for auditors covering areas such as how to deal the question of whether a business is a going concern.

Wrongful Trading and business restructuring

On 28 March the UK Business secretary announced changes to insolvency law “to enable UK companies undergoing a rescue or restructure process to continue trading, giving them breathing space that could help them avoid insolvency”.

The wrongful trading law is being temporarily suspended, retrospective from 1 March 2020. for three months. This gives company directors the ability to keep their businesses in being without risking personal liability.

Scotland, Wales and Northern Ireland

Some elements of business support are devolved:

  • Guidance for Scotland is here
  • Guidance for Wales is here
  • Guidance for Northern Ireland is here

Government guidance for employers and businesses is here and business support details are here.

Measures for individuals

Mortgage holidays

For people who find themselves in financial difficulties because of coronavirus, mortgage lenders will offer at least a three-month mortgage holiday. This holiday extends to buy-to-let landlords.

Protection from eviction

Private and social landlords will not be able to start proceedings to evict tenants for the period to 30 September 2020.

Statutory sick pay (SSP)

SSP is currently paid at the rate of £ £95.85 a week. It is now available to employees from day one, instead of day four, for those who are suffering from the virus or who have been advised to self-isolate. There has been no change in the minimum earnings threshold for SSP (£120 a week in 2020/21).

Individuals ineligible for SSP

Self-employed and gig economy workers generally do not qualify for SSP. Instead they may be entitled to Contributory Employment and Support Allowance.

Covid-19 sufferers and self-isolators will be able to claim the benefit from day one instead of day eight. The Minimum Income Floor in Universal Credit (UC) has been temporarily removed to ensure that time off work because of sickness is reflected in benefits.

For 12 months from 6 April 2020, the standard allowance in Universal Credit (UC) and the basic element in Working Tax Credit (WTC) for will be increased by the equivalent of about £20 a week over and above annual uprating (which were to £323.22 per month for UC for age 25 and over and £1,995 a year for WTC for 2020/21). This effectively brings UC into line with the rate of SSP. The change applies to all new and existing UC claimants and to existing WTC claimants.

Housing benefit

Housing benefit and the housing element of UC will be increased so that the Local Housing Allowance will cover at least 30% of market rents.

Hardship Fund

The Chancellor announced in the Budget a £500 million Hardship Fund, which would be distributed to Local Authorities so that they could support the vulnerable.

Government guidance for employees is here.

Government guidance on claiming benefits is here.

Main provisions for the self-employed

On Thursday 26 March, Chancellor Rishi Sunak made his long-awaited statement about the Covid-19 government support scheme for the self-employed, called the Self-employment Income Support Scheme (SEISS). Reports suggest that the announcement had been slow to arrive because of the greater difficulty in structuring and running a scheme that relied on annual information (via tax returns) and could not operate via the PAYE system.

SEISS provisions

The SEISS will pay a directly payable taxable grant to the self-employed (including members of partnerships) based on 80% of profits averaged over the last three tax years (or shorter periods if self-employment started after 2016/17), subject to a maximum of £2,500 a month.

  • The initial payment term of the SEISS grant will be “at least three months”.
  • The payment of the grant will not prevent the claimant from continuing to work.

Restrictions on the SEISS

The SEISS will be restricted in three ways:

1.Self-employment must provide the majority of the claimant’s income (based on the period used for the £50,000 test set out below)

2.Trading profits either:
  • were less than £50,000 in 2018/19; or
  • trading profit were less than £50,000 averaged over the three tax years from 2016/17. If trading started between 2016-19, HMRC will only use those years for which a Self-Assessment tax return has been filed.

According to the Chancellor, these thresholds mean the scheme covers 95% of the self-employed. The corollary is that it creates a cliff edge at £50,000, a figure that appears elsewhere in the tax system (e.g. the higher rate tax threshold).

3.The claimant must have submitted a 2019 tax return (covering the 2018/19 tax year). As a concession, any later filer will have four weeks to submit their overdue return if they wish to be included in the scheme.

HMRC will use their existing information to assess eligibility and contact individuals directly, requesting completion of “a simple online form”. A gov.uk webpage gives more details, but is somewhat confusingly headed “Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme”. The “don’t call us, we’ll call you” approach is aimed at preventing HMRC being overwhelmed with telephone queries, as has happened with the DWP’s Universal Credit system.

Timing of payments

Payments from HMRC should start at the beginning of June. The initial sum will represent three months’ cumulative payments. Until then the self-employed can claim Universal Credit. In his statement the Chancellor said Universal Credit could give a self-employed person with a non-working partner and two children, living in the social rented sector, support of up to £1,800 a month.

Anyone whose self-employment started after 5 April 2019 and thus has no self-employed earnings recorded with HMRC cannot benefit from the scheme and must rely on Universal Credit.

One-person companies

Those who operate through one person companies are not covered by the scheme as, despite the media label often given to them, they are not self-employed. The Treasury press release states that such people “will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes”. The use of the word ‘salary’ is key here, as many one person companies route the bulk of their employee’s remuneration via dividends to reduce National Insurance liabilities (see CJRS above).

In his closing remarks the Chancellor noted that “…in devising this scheme … it is now much harder to justify the inconsistent contributions between people of different employment statuses”. This was a subtle way of suggesting that National Insurance contributions will have to rise for the self-employed once the crisis is over.

Coronavirus Act

The day before the Chancellor’s latest statement, the Coronavirus Act 2020 received Royal Assent. This 348-page Act deals with a broad range of Covid-19 related measures (many of which exclude Scotland because of its devolved powers), including:

  • Food supply.
  • Statutory Sick Pay (SSP) modifications, e.g. funding of the employer’s liabilities.
  • Suspension of the complex abatement rules that either reduce or suspend NHS pensions on an individual’s return to work.
  • Uprating of working tax credit.
  • Protection from eviction for residential tenancies to 30 September 2020.
  • Protection from forfeiture for commercial tenancies to 30 June 2020.

The explanatory notes for the original Bill (introduced on 19 March ) are here.

Updated government Covid-19 guidance on business support is here and for employees is here.

Image courtesy of Flickr_Pink Sherbert Photography

In Focus Spring 2020

The COVID-19 pandemic has forced an international shut down of most everyday life and business.

The Chancellor has already announced two rounds of measures to support the UK economy in addition to the emergency budget.

In the Spring issue of In Focus we also look at five years of pension flexibility, the national living wage vs new state pension and shifts in the savings landscape.

INFOCUS

Click here to download your copy.

 

Image Courtesy of Flickr_Ishan Manjrekar

Covid-19 measures: Main provisions for the self-employed

On Thursday 26 March, Chancellor Rishi Sunak made his long-awaited statement about the Covid-19 government support scheme for the self-employed, called the Self-employment Income Support Scheme (SEISS). Reports suggest that the announcement had been slow to arrive because of the greater difficulty in structuring and running a scheme that relied on annual information (via tax returns) and could not operate via the PAYE system.

Main provisions for the self-employed

The main points from the Chancellor’s statement and accompanying press release are:

  • The SEISS will pay a directly payable taxable grant to the self-employed (including members of partnerships) based on 80% of profits averaged over the last three tax years (or shorter periods if self-employment started after 2016/17), subject to a maximum of £2,500 a month. In a recent briefing note from the Institute for Fiscal Studies, it was suggested that the £2,500 figure (which also applies to the employees’ Job Retention Scheme) is the maximum payment that will be made, not the maximum earnings that are protected, i.e. 80% of up to £37,500 of profits ([£37,500 x 80%] /12 = £2,500) will be covered.
  • The initial payment term of the SEISS grant will be “at least three months”.
  • The payment of the grant will not prevent the claimant from continuing to work.
The SEISS will be restricted in three ways:
-Self-employment must provide the majority of the claimant’s income. It is unclear how this is calculated.
Trading profits either:
  • are less than £50,000 in 2018/19; or
  • trading profit was less than £50,000 averaged over the three tax years from 2016/17.

According to the Chancellor, these thresholds mean the scheme covers 95% of the self-employed. The corollary is that it creates a cliff edge at £50,000, a figure that appears elsewhere in the tax system (e.g. the higher rate tax threshold).

  • The claimant must have submitted a 2019 tax return (covering the 2018/19 tax year). As a concession, any later filer will have four weeks to submit their overdue return if they wish to be included in the scheme.

HMRC will use their existing information to assess eligibility and contact individuals directly, requesting completion of “a simple online form”. A gov.uk webpage gives more details, but is somewhat confusingly headed “Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme”. The “don’t call us, we’ll call you” approach is aimed at preventing HMRC being overwhelmed with telephone queries, as has happened with the DWP’s Universal Credit system.

  • Payments from HMRC should start at the beginning of June. The initial sum will represent three months’ cumulative payments. Until then the self-employed can claim Universal Credit. In his statement the Chancellor said Universal Credit could give a self-employed person with a non-working partner and two children, living in the social rented sector, support of up to £1,800 a month.
  • Anyone whose self-employment started after 5 April 2019 and thus has no self-employed earnings recorded with HMRC cannot benefit from the scheme and must rely on Universal Credit.
  • Those who operate through one person companies are not covered by the scheme as, despite the media label often given to them, they are not self-employed. The Treasury press release states that such people “will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes”. The use of the word ‘salary’ is key here, as many one person companies route the bulk of their employee’s remuneration via dividends to reduce National Insurance liabilities.

In his closing remarks the Chancellor noted that “…in devising this scheme … it is now much harder to justify the inconsistent contributions between people of different employment statuses”. This was a subtle way of suggesting that National Insurance contributions will have to rise for the self-employed once the crisis is over.

Coronavirus Act

The day before the Chancellor’s latest statement, the Coronavirus Act 2020 received Royal Assent. This 348-page Act deals with a broad range of Covid-19 related measures (many of which exclude Scotland because of its devolved powers), including:

  • Food supply.
  • Statutory Sick Pay (SSP) modifications, e.g. funding of the employer’s liabilities.
  • Suspension of the complex abatement rules that either reduce or suspend NHS pensions on an individual’s return to work.
  • Uprating of working tax credit.
  • Protection from eviction for residential tenancies to 30 September 2020.
  • Protection from forfeiture for commercial tenancies to 30 June 2020.

The explanatory notes for the original Bill (introduced on 19 March ) are here.

Updated government Covid-19 guidance on business support is here and for employees is here.

Image courtesy of Flickr_Pink Sherbert Photography

Covid-19 Measures – March 2020

The 11 March Budget from the new Chancellor, Rishi Sunak, included £7 billion of expenditure targeting the impact of Covid-19 on employees, the self-employed and businesses. On 17 March a further raft of measures was announced, amounting to an additional £20 billion of support expenditure plus £330 billion of loan guarantees. By 20 March another round of support was announced of such size that no price tag was attached. On 26 March the awaited package for the self-employed was announced.

The Chancellor’s 17 March statement was accompanied by a repeated promise that he would do “whatever it takes” to counter the impact of the virus. Three days later, his second statement gave an indication of how large ‘whatever it takes’ is becoming, with potentially more to come.

We have pulled together a round-up of the key announcements so far for businesses and individuals including useful links to government sites.

Measures for business

Coronavirus Job Retention Scheme (CJRS)

Some form of job support scheme had been expected after the 17 March announcement and the CJRS is similar to schemes that have already been set up elsewhere in Europe. Under the CJRS, “HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month’. In this context ‘furloughed workers’ are non-working employees who are kept on the payroll, rather than being laid off. The employer has to designate these employees and submit relevant information to HMRC via a “new online portal”.

Statutory sick pay (SSP)

Businesses with fewer than 250 employees will be refunded the full cost of providing SSP to any employee off work for up to 14 days because of coronavirus.

Loan guarantees

A government-backed loan guarantee scheme announced in the Budget has since been twice enhanced.  The Government will now provide loan guarantees up to “an initial” £330 billion for all sizes of businesses:

  • For large firms, the Bank of England is launching a Covid Corporate Financing Facility (CCFF), which “will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy”.
  • For small and medium sized businesses The loan limit on the Coronavirus Business Interruption Loan Scheme (originally announced in the Budget at £1.2 million) is now £5 million. No interest will be due for the first twelve months and lender-levied fees will be covered. The scheme will be delivered through commercial lenders, backed by the British Business Bank. Eligible SMEs must be UK-based with turnover of not more than £45 million and meet “the other British Business Bank eligibility criteria”.

For the period between 20 March 2020 and 30 June 2020, businesses will not be required to make a VAT payment. Instead they will be able to defer this payment until the end of the 2020/21. VAT refunds and reclaims will be paid by the government as normal. No applications will be required as the process will be automatic.

For the self-employed, self assessment income tax payments due on the 31 July 2020 (the second payment on account for 2019/20) will be deferred until the 31 January 2021. This also will not require an application. Penalties and interest for late payment will not be charged in the deferral period.

Business Rates Retail Discount 

All shops, cinemas, restaurants, music venues and business operating in the leisure and hospitality sectors will have no business rates to pay in 2020/21.

On 17 March the Chancellor also promised an additional cash grant of “up to £25,000 per business” to businesses with a rateable value of less than £51,000 – i.e. those that would have benefited from the old version of Business Rates Retail Discount Scheme.

Businesses already eligible for small business rates relief

There will be a flat £10,000 cash grant for each business that already benefits from zero or reduced business rates because of small business rate relief.

Insurance cover

Although the government has not required the leisure and hospitality businesses to close, on 17 March the Chancellor said that “for those businesses which do have a policy that covers pandemics, the government’s action is sufficient and will allow businesses to make an insurance claim against their policy”. However, pandemic cover is not a feature of most business disruption cover, a point underlined by the Association of British Insurers in a statement it issued on 17 March.

Off-payroll working in the private sector (IR35)

Also on 17 March, the Chief Secretary to the Treasury, Steve Barker, said in a statement to the House of Commons that the start date for the new IR35 tax rules would be deferred to 6 April 2021.

Time to Pay (TTP)

In the Budget, the Chancellor announced that HMRC would scale up its Time To Pay service, giving businesses and the self-employed the chance to defer tax payments.

Government guidance for employers and businesses is here and business support details are here.

Measures for individuals

Mortgage holidays

For people who find themselves in financial difficulties because of coronavirus, mortgage lenders will offer at least a three-month mortgage holiday.

Statutory sick pay (SSP)

SSP is currently paid at the rate of £94.25 a week, rising to £95.85 from April. It is now available to employees from day one, instead of day four, for those who are suffering from the virus or who have been advised to self-isolate. So far there has been no change in the minimum earnings threshold for SSP (£118 a week currently, rising to £120 a week in 2020/21).

Individuals ineligible for SSP

Self-employed and gig economy workers generally do not qualify for SSP. Instead they may be entitled to Contributory Employment and Support Allowance.

Covid-19 sufferers and self-isolators will be able to claim the benefit from day one instead of day eight. The minimum income floor in Universal Credit (UC) has been temporarily removed to ensure that time off work because of sickness is reflected in benefits.

For 12 months from 6 April 2020, the standard allowance in Universal Credit (UC) and the basic element in Working Tax Credit (WTC) for will be increased by the equivalent of about £20 a week over and above planned annual uprating (which were to £323.22 per month for UC for age 25 and over and £1,995 a year for WTC). This effectively brings UC into line with the rate of SSP. The change will apply to all new and existing UC claimants and to existing WTC claimants.

Housing benefit

Housing benefit and the housing element of UC will be increased so that the Local Housing Allowance will cover at least 30% of market rents.

Hardship Fund

The Chancellor announced in the Budget a £500 million Hardship Fund, which would be distributed to Local Authorities so that they could support the vulnerable.

Government guidance for employees is here.

Main provisions for the self-employed

On Thursday 26 March, Chancellor Rishi Sunak made his long-awaited statement about the Covid-19 government support scheme for the self-employed, called the Self-employment Income Support Scheme (SEISS). Reports suggest that the announcement had been slow to arrive because of the greater difficulty in structuring and running a scheme that relied on annual information (via tax returns) and could not operate via the PAYE system.

The main points from the Chancellor’s statement and accompanying press release are:

  • The SEISS will pay a directly payable taxable grant to the self-employed (including members of partnerships) based on 80% of profits averaged over the last three tax years (or shorter periods if self-employment started after 2016/17), subject to a maximum of £2,500 a month. In a recent briefing note from the Institute for Fiscal Studies, it was suggested that the £2,500 figure (which also applies to the employees’ Job Retention Scheme) is the maximum payment that will be made, not the maximum earnings that are protected, i.e. 80% of up to £37,500 of profits ([£37,500 x 80%] /12 = £2,500) will be covered.
  • The initial payment term of the SEISS grant will be “at least three months”.
  • The payment of the grant will not prevent the claimant from continuing to work.
  • The SEISS will be restricted in three ways:
    • Self-employment must provide the majority of the claimant’s income. It is unclear how this is calculated.
    • Trading profits either: are less than £50,000 in 2018/19; or trading profit was less than £50,000 averaged over the three tax years from 2016/17.

According to the Chancellor, these thresholds mean the scheme covers 95% of the self-employed. The corollary is that it creates a cliff edge at £50,000, a figure that appears elsewhere in the tax system (e.g. the higher rate tax threshold).

  • The claimant must have submitted a 2019 tax return (covering the 2018/19 tax year). As a concession, any later filer will have four weeks to submit their overdue return if they wish to be included in the scheme.

HMRC will use their existing information to assess eligibility and contact individuals directly, requesting completion of “a simple online form”. A gov.uk webpage gives more details, but is somewhat confusingly headed “Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme”. The “don’t call us, we’ll call you” approach is aimed at preventing HMRC being overwhelmed with telephone queries, as has happened with the DWP’s Universal Credit system.

  • Payments from HMRC should start at the beginning of June. The initial sum will represent three months’ cumulative payments. Until then the self-employed can claim Universal Credit. In his statement the Chancellor said Universal Credit could give a self-employed person with a non-working partner and two children, living in the social rented sector, support of up to £1,800 a month.
  • Anyone whose self-employment started after 5 April 2019 and thus has no self-employed earnings recorded with HMRC cannot benefit from the scheme and must rely on Universal Credit.
  • Those who operate through one person companies are not covered by the scheme as, despite the media label often given to them, they are not self-employed. The Treasury press release states that such people “will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes”. The use of the word ‘salary’ is key here, as many one person companies route the bulk of their employee’s remuneration via dividends to reduce National Insurance liabilities.

In his closing remarks the Chancellor noted that “…in devising this scheme … it is now much harder to justify the inconsistent contributions between people of different employment statuses”. This was a subtle way of suggesting that National Insurance contributions will have to rise for the self-employed once the crisis is over.

Coronavirus Act

The day before the Chancellor’s latest statement, the Coronavirus Act 2020 received Royal Assent. This 348-page Act deals with a broad range of Covid-19 related measures (many of which exclude Scotland because of its devolved powers), including:

  • Food supply.
  • Statutory Sick Pay (SSP) modifications, e.g. funding of the employer’s liabilities.
  • Suspension of the complex abatement rules that either reduce or suspend NHS pensions on an individual’s return to work.
  • Uprating of working tax credit.
  • Protection from eviction for residential tenancies to 30 September 2020.
  • Protection from forfeiture for commercial tenancies to 30 June 2020.

The explanatory notes for the original Bill (introduced on 19 March ) are here.

Updated government Covid-19 guidance on business support is here and for employees is here.

Image Courtesy of Patrícia Almeida on Flickr

Rest assured, we are open for business

In response to the rapidly developing Coronavirus COVID-19 situation we would like to ensure clients that our business can, and will, continue to operate remotely effectively. We have tested our business continuity plan and all direct lines will be transferred to mobiles – and all staff have full remote access to IT systems to ensure we operate business as usual.

As of today, staff at PK Partnership have been working remotely from home, and we will be operating a skeleton staff in the office. We have rearranged all face-to-face client visits and will be available by phone and email.

We are monitoring this fast moving and ever-changing situation along with our insurer and financial partners.

PK Partnership Mortgage

Budget Snapshot 2020

The Budget Statement was delivered today at 12.30pm by the new Chancellor of the Exchequer, Rishi Sunak.

The last Budget was in November 2018. Records suggest the last calendar year before 2019 without a UK Budget was 1768, the year James Cook set sail on his first voyage to the Pacific.

 

About the Budget

 

The Budget is a report presented each year by the Chancellor to Parliament and the nation. The primary role of the Budget is to control public finances by setting out how much tax the Government will collect, how much the Government will borrow and how much the Government will spend. This snapshot is not an in-depth analysis but aims to give you a quick summary of the key points announced by the Chancellor from the dispatch box.

 

Main Headlines from the Speech

Introduction

 

The Chancellor describes this Budget as delivering on the change promised in the General Election.

 

Coronavirus

 

  • £5 billion emergency response fund to support the NHS and other public services.
  • Statutory sick pay will be payable from day 1 to all those who choose to self-isolate even if they don’t have symptoms. Sick notes will be available from NHS 111.
  • Contributory employment and support allowance claimants will be able to claim sick pay on day one not after a week.
  • £500 million fund for councils to help vulnerable people.
  • SMEs with fewer than 250 staff will be refunded for sick pay payments for two weeks.
  • SMEs will be able to access business interruption loans of up to £1.2 million guaranteed up to 80% by the Government.
  • Business rates will be abolished for firms in retail, leisure and hospitality sectors with a rateable value below £51,000.
  • There will be a statement by the Health Secretary, Matt Hancock, in the Commons tonight at 7.00.pm

 

Economic forecasts

 

The forecasts do not take into account the effect coronavirus may have on the economy.

Growth

2020: 1.1%

2021: 1.8%

2022: 1.5%

2023: 1.3%

2024: 1.4%

Inflation

2020: 1.4%

2021: 1.8%

2022: 2.0%

2023: 2.0%

2024: 2.0%

Borrowing forecast (not expressed in cash terms)

2.1% of GDP in 2019/2020

2.4% in 2020/2021

2.8% in 2021/2022

2.5% in 2022/2023

2.4% in 2023/2024

2.2% in 2024/2025

Debt forecast to go down from 79.5% of GDP this year to 75.2% in 2024/2025.

Review of fiscal framework by autumn in view of the global low interest rate environment.

 

Taxation and pensions

 

  • No change to income tax thresholds in 2020/2021.
  • NI threshold increases to £9500 from April 2020.
  • NI holiday for employers of veterans in first year of civilian employment.
  • Off payroll working rules (IR35) to be implemented as planned from April 2020.
  • Tapered annual allowance: income thresholds to be increased by £90,000 and minimum tapered annual allowance to be reduced to £4000 from April 2020.
  • Lifetime allowance to increase to £1,073,100 in 2020/2021.
  • Annual subscription limit for Junior ISAs and Child Trust Funds to increase from £4368 to £9000. ISA limit remains unchanged at £20,000.
  • Legislation to put beyond doubt the calculation of top-slicing relief by specifying how allowances and reliefs can be set against life insurance policy gains and will apply to all relevant gains occurring on or after 11 March 2020.
  • VAT to be abolished on women’s sanitary products.
  • Entrepreneur’s relief: lifetime limit reduced to £1 million
  • Stamp duty surcharge of 2% on non-UK residents purchasing residential property from April 2021 to fund rough sleepers fund.
  • Independent Low Pay Commission to have new remit of targeting a National Living Wage of two thirds of median earnings by 2024 which is estimated to be £10.50 an hour.

 

Excise duties

 

  • No increase to beer, cider, wine and spirits duties.
  • No increase to fuel duty.
  • Tobacco duty to increase by RPI + 2% (RPI + 6% for hand-rolling tobacco) until the end of this Parliament. These changes will take effect from 6.00pm this evening.

 

Environment

 

  • Abolition of tax relief for red diesel in 2022 for most sectors except agriculture, rail, fishing and domestic heating.
  • Plastic packaging tax: from April 2022, charge of £200 a tonne on packaging with less than 30% recycled content.
  • 30,000 hectares of trees to be planted and 35,000 hectares of peatland restored.
  • Investment in flood defences to double over the next five years to £5.2 billion.
  • £500 million to increase the roll-out of rapid charging hubs, so that drivers are never more than 30 miles away from one.
  • £800 million to establish two or more Carbon Capture and Storage clusters by 2030

 

Health

 

  • NHS funding to increase by £6 billion over the course of this parliament.
  • NHS surcharge for new arrivals from overseas to increase to £624 with a discount for children.

 

Infrastructure

 

  • Additional funding of £640 million for Scotland, £360 million for Wales and £210 million for Northern Ireland.
  • West Yorkshire to have directly elected mayor who will share extra £4.2 billion with other metro mayors (Greater Manchester, Liverpool City Region, West Midlands, Tees Valley, Tyne and Wear, Sheffield City Region, West of England) for transport investment.
  • £27 billion investment on more than 4,000 miles of roads.
  • £5 billion of funding for gigabit-capable broadband.
  • Additional £1.5 billion to be made available for further education funding.
  • More than 750 staff from Treasury, business and trade departments to move to north of England. More than 22,000 civil servant roles to move outside central London in the long term.

 

Housing

 

  • £1.1 billion from housing infrastructure fund to build around 70,000 new homes in high demand areas.
  • Building safety fund worth £1 billion to be used to remove cladding from tall residential buildings.
  • £650 million fund to help rough sleepers into accommodation
PK Partnership Mortgage

Consider insuring your whisky collection

Fine wine has been a staple investment for investors for a numbers of years and now whisky has become increasingly collectible with investors looking at the market to spur growth in their investments. The value of rare Scotch whisky sold at auction exceeded £16 million for the first time in 2018.

There was a year-on-year increase of 46% compared to the same period in 2017. Compared to 2013, the market has grown 732%, demonstrating the increasing popularity of whisky as an alternative investment to fine wines. In 2018, a bottle of ‘The Macallan 1926 60 Year Old’, broke the world record at auction for a single bottle of whisky, selling for £1.2 million at Christie’s in London.

In 2019, auctioneers unveiled what is believed to be the largest private whisky collection ever to go on public sale. More than 3,900 bottles of primarily single malt Scotch, including very rare bottles from The Macallan, Bowmore and Springbank distilleries. The total value of the collection has been estimated at an auction price of between £7m – £8m. Perthshire based Whisky Auctioneer will sell the collection over two online auctions in February and April 2020.

In 2019, a Vietnamese businessman was revealed as the owner of the world’s most valuable whisky collection. Mr Viet Nguyen Dinh Tuan’s collection comprises some of the world’s oldest, finest and rarest bottles of Scotch and Japanese whisky, with an estimated auction hammer price of nearly £10.8m by valuation experts Rare Whisky.

Whilst whisky may be becoming a more attractive investment option, there are still some considerations to be had before putting your money where your glass is:

Buy what you like drinking – if you buy what you like to drink, even if your investment doesn’t increase in value, you can still enjoy your collection by drinking it. Compared to wine, whisky keeps for longer and will retain its flavour over many years. If it’s stored under the right conditions, you have plenty of time to enjoy it.

Consider collecting in themes – most collectors start out by buying whisky from a particular distillery. Other collectable themes include; a particular area or production technique or even a certain type of whisky (Bourbon, Scotch, Japanese or Irish).

Buy Limited edition – the scarcity of the bottle is what really impacts its price. A lot of distilleries (and certainly those that are well-known), will produce limited edition runs of certain releases. Like any collectible item, a rare whisky will fetch a higher price than those that are available to everyone. Another tip is to look out for bottles from ‘lost’ distilleries, these are distilleries that have closed down or no longer produce whisky. As these bottles become harder to source, their collectability and value rises.

Don’t forget about storage – it’s important that like fine wine, you correctly store your collection. Whilst whisky is less volatile and easier to store, if the right precautions are not followed then it can degrade. Some things to consider are:

  • Store the bottles upright
  • Keep away from strong sunlight
  • Avoid extreme temperature fluctuations
  • Have a labelling/filing system in place

It’s worth having some form of filing/labelling system for your collection, so it’s easier to correctly identify your bottles. It’s also better to have a filing system for your collection for insurance purposes. In the event of a claim, it’s easier for all parties if you can methodically list out your collection with the related evidence.

Compared to fine wine, whisky is easier to store and a bottled spirit will neither improve nor get worse over time, which means that its value should continue to increase, as the supply of it diminishes. Fine wines are much more sensitive and often require costly investment to ensure that they are stored in optimal conditions. Investing in rare spirits such as whisky, can offer a potentially safer and lower-maintenance choice compared to the traditional fine wine investment market.

Consider insuring your collection

A standard homeowner’s policy isn’t designed to fully insure an extensive or expensive whisky collection.

Instead, in order to insure your whisky collection, you should consider purchasing an insurance policy that will cover your whisky collection for damage, spoilage or loss. As well as ensuring that you aren’t underinsured and knowing that your collection is adequately covered.

To arrange a review of your personal insurances including whiskey collections, wine collections, high value performance cars and art, please contact Anjana Pankhania on 020 8681 4994 or anjana@pkpartnership.co.uk

 

 

 

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